Oracle shifts multicore licensing model

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BEA's case, the company charges a 25 premium for dual-core servers.

In the face of policy statements from several competitors, Oracle executives indicated over the past several months that they were re-evaluating their licensing model to take into account multicore chips.

In Oracle's new licensing plan, customers need to take the number of cores used in a server processor and multiply that by 0.75 and then round up to a whole number. For example, a multicore chip with 11 cores will be counted as 9 processors. (11 times 0.75 equals 8.25, which is rounded up to 9.)

In the case of Oracle's low-end databases--Oracle Standard Edition and Standard Edition One--the maximum number of processors will be counted as one to ensure that those customers have a discount with the new policy, which went into effect July 9.

Noel Yuhanna, a database analyst at Forrester Research, expects Oracle to revisit its pricing plan again in the near future.

"This could hurt their revenue if they take a stance of charging a premium for dual and multicore," Yuhanna said. "The (database) technologies from IBM, Microsoft and Oracle are very comparable, so it comes down to cost. Cost is an important factor."

In a conference call on Friday, Jacqueline Woods, Oracle's vice president of pricing and licensing, said that Oracle concluded that customers get "incremental value" in going with dual-core servers. Customers will get between 1.5 and 1.75 times improvement in performance by going with a dual-core server.

"We think that this is the right pricing for that environment," Woods said.

Woods also noted that Oracle's pricing scheme is consistent across all hardware platforms, while IBM makes an exception on how it counts cores for its own Power-based servers.

Giera said that another point muddying the license picture is virtualization, where several operating systems can run on a single processor.

Virtualization software company VMware, a subsidiary of EMC, this month intends to announce that dual-core processors will be treated as a single chip when calculating license cost for its entire line.

Woods said that Oracle has started using a per-employee licensing option for some customers. This approach, which makes pricing independent of the hardware running applications, will help smooth over some of the complexities that virtualization introduces, she said.

"I do think that you will see a trend moving back to employee or user-based licensing. I think people will be doing that because that may be easier," Woods said.

But even as vendors state their new policies, Giera said that corporate customers need to look carefully at the details of different vendors' terms.

"Everyone's got a slightly different twist on how you have to pay for virtualization and multicore," she said. "You need to understand the implications before you do any financial modeling."

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Oracle still doesn't get it

Changing their model to charge 3/4 per core doesn't bring them in line and is only a small step from where they've been.

What they've failed to realize is that the nature of processor performance improvements has been changed from a rapidly increasing clock speed model which provides significant performance increases for single threaded processes (like MS DOS) to a multiple cpu core model with modest clock speed improvements which finally results in better performance for multi-threaded OSes and processes (like Linux, Unix, Windows, MacOS...).

Oracle wants to treat these multi-core cpus like separate processors were treated in the old model but in reality new systems will still have as many multi-core chips as they previous had single core chips. They're afraid they're going to loose revenue and their fear of lost revenue is going to be self achieving.